Impact Analysis of Nestlé Infant Formula Recall Incident

According to the latest data, Nestlé conducted two consecutive recalls of infant formula products in the European market between November and December 2025:

：Recalled NAN EXPERT pro lactose-free formula in Belgium and Luxembourg due to possible Cronobacter contamination [2]. The affected product batch number is L-51520346AC, with a shelf life until June 2027 [2].

：Recalled 800g packs of NAN Sensilac 1 infant formula in Finland and Denmark due to possible Bacillus cereus contamination. The affected batch number is 53030346AB, with a shelf life until October 2027 [2].

From the stock price chart:

1. Relatively stable stock price during the recall period
   : After the first recall announcement on November 17, Nestlé’s stock price did not fluctuate sharply, closing at approximately CHF 79.00 on that day, with stable trends in the following days.

2. Limited impact of the second recall in early December
   : After the second recall announcement, the stock price continued to oscillate in the range of CHF 78-79, with no obvious selling pressure.

3. Overall performance during the period
   : From November 1 to December 16, Nestlé’s stock price rose from CHF 77.40 to CHF 78.84, an increase of 1.63% [0], indicating that the negative impact of the recall incident on the stock price was extremely limited.

The trading volume did not increase abnormally during the recall incident, indicating that market investors reacted relatively平淡ly to the incident and no large-scale selling behavior was triggered.

As a high-risk food category, safety issues have a huge impact on consumer confidence. According to historical cases:

• Lessons from the Melamine Incident
  : The 2008 melamine incident caused domestic milk powder brands to lose trust collectively, and the market share of imported milk powder once exceeded 70% [1]. The incident caused health damage to 300,000 children and created a collective psychological shadow of “once bitten, twice shy” [1].

• Industry Universality
  : Food safety recalls are not uncommon in the food and beverage industry. According to statistics, 58% of British and American companies have been affected by food recalls, and 18% of consumers will abandon the brand due to recalls that cause consumer illness [2].

Nestlé’s response to this incident was relatively timely:

• Proactively initiated a voluntary recall
• Immediately notified consumers to stop using and return products
• Timely released information through official websites and media
• No related disease reports have been received so far [2]

: Recalled Similac and other brand formula milk powder due to Cronobacter contamination, leading to a serious shortage of infant formula milk powder in the United States, which had a major impact on the company’s performance and market reputation [2].

: Recalled all formula products nationwide due to infant botulism cases, involving at least 15 infants in 15 states [2].

Compared with these cases, Nestlé’s recall scale was relatively small, and no actual case reports appeared.

According to the latest financial data [0]:

• Market Capitalization
  : $202.83 billion
• P/E Ratio
  : 19.71 times, in a reasonable range
• Net Profit Margin
  : 11.34%
• Operating Profit Margin
  : 15.51%
• ROE
  : 31.83%, showing good capital utilization efficiency

Based on the DCF valuation model [0]:

• Conservative Valuation
  : CHF 106.28 (+34.8% compared to current price)
• Base Valuation
  : CHF 159.04 (+101.7% compared to current price)
• Optimistic Valuation
  : CHF 332.48 (+321.7% compared to current price)

The current stock price of CHF 78.84 is significantly lower than the lower limit of the valuation range, indicating that the market may be overly concerned about short-term risks.

1. Severity of the Incident
   : Did it cause actual harm?
2. Recall Scale
   : The proportion of involved products to the overall business
3. Response Measures
   : Company’s reaction speed and transparency
4. Regulatory Risks
   : Possible penalties and investigations
5. Long-term Impact
   : Impact on brand loyalty and market share

1. Business Diversification
   : Infant nutrition accounts for only a small part of Nestlé’s total revenue, with a high degree of risk diversification
2. Financial Strength
   : Strong cash flow and profitability provide a buffer
3. Global Layout
   : Regional recalls have limited impact on the overall business
4. Brand Portfolio
   : Has multiple strong brands with strong risk resistance

For food and beverage giants’ food safety incidents, investors should:

1. Distinguish between permanent vs temporary impacts
   : Distinguish long-term damage to core competitiveness and brand value
2. Evaluate management response
   : Observe crisis handling capabilities and transparency
3. Pay attention to regulatory changes
   : May lead to higher industry access thresholds
4. Reassess risk premium
   : Appropriately adjust the weight of food safety risks
5. Look for investment opportunities
   : Overreaction may create buying opportunities

The impact of Nestlé’s infant formula recall incident on the company’s stock price and brand image is

:

• Stock Price Impact
  : Minor short-term impact, no significant decline
• Brand Impact
  : Due to timely and proactive recall and no disease reports, the loss of brand reputation is controllable
• Financial Impact
  : Direct economic losses are expected to be limited, with minimal impact on overall performance

1. Existing Investors
   : It is recommended to continue holding; the incident does not change the company’s long-term investment value
2. Potential Investors
   : The current stock price may undervalue the company’s intrinsic value and is worth paying attention to
3. Risk Monitoring
   : Closely follow subsequent regulatory progress and consumer confidence recovery

Food safety incidents are inherent risks in the food and beverage industry, but large multinational companies usually have stronger risk resistance capabilities. The key lies in crisis handling capabilities and long-term brand building investment. Nestlé’s response this time was relatively proper, providing a good crisis management example for the industry.

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[0] Gilin API Data - Nestlé Stock Price, Financial Data and Valuation Analysis
[1] NetEase - Domestic HMO Milk Powder: What to Do to Regain Chinese Parents’ Trust? (https://www.163.com/dy/article/KGJIMT7R0552581S.html)
[2] Food Safety News - Nestlé recalls infant formula in Europe (https://www.foodsafetynews.com/2025/12/nestle-recalls-infant-formula-in-europe/)
[3] The Brussels Times - Nestlé recalls Nan Expert pro lactose-free milk (https://www.brusselstimes.com/1842398/nestle-recalls-nan-expert-pro-lactose-free-milk)
[4] Chronicle.lu - Nestlé Baby Formula Recalled over Possible Cronobacter Presence (https://chronicle.lu/category/shopping-1/58022-nestle-baby-formula-recalled-over-possible-cronobacter-presence)
[5] Consumer Notice - Baby Formula Recall (https://www.consumernotice.org/products/baby-formula/recall/)
[6] Economic Times - ByHeart recalls all baby formula products across U.S. after infant botulism cases reported (https://m.economictimes.com/news/international/us/byheart-recalls-all-baby-formula-products-across-u-s-after-infant-botulism-cases-reported/articleshow/125255151.cms)